20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

26:09What capital concentration limit do you find uncomfortable? I'd say 20 % is my limit of a fund in one company. I think industry standard is probably 10%. I'm at 20%. By the way, from the LP perspective, diversification at the level of the GP makes no sense because they have multiple GPs. So the recession gives nothing to LPs. Maybe the GP feels better, maybe. But of course, I think it's a mistake. I'd rather be concentrated in the best deals I can find because then when you have a winner, it really makes a difference. LPs have said to me before about you, forgive me for this, dude. He deploys too fast.

26:48We love him. He's smart. He's great. Too fast, like 12 months sometimes last. Yeah, I know. Camperol diversification is important. You need to bake different vintages in. Are they wrong? Or do you just respectfully not give a shit because you don't need to? It's probably the latter. I'm going to do my thing. And if it works for them, fine. And if not, they can opt themselves out. And some of them have. And it's fine. Good people opted out. And it's fine. I'm not going to do things differently. And by the way, I'm not investing fast because I want to invest fast. I'm just seeing opportunities I want to do.

27:20And by the way, sometimes looking back, you know, if I look at 2021, I would say I invested too fast. You know, I wish I didn't. Okay. But to answer your question, yeah, it makes their life a little bit more difficult because it's hard for them. And the thing is, it's not just the speed. It's also the fact that I'm not consistent. So I make it harder for them to plan, you know, because they're not sure when they put the money, if it's going to be good for one year or two years or nine months. So I, you know, so it makes their sizing decision more difficult. So I, you know, I get it. I get it. But this is something that, you know, if you ask me of all the things that I do that LPs might like less, I would say this is it.

28:03But honestly, I don't want to I don't want to not invest in the company when I you know, when I think it's compelling just because I just made another, you know. So what makes you say that in 2021 you invested too fast and what are your lessons from that? Well, I think in general in 2021, pretty much every deal that I did. And most actually I should have because these are quality companies, but every single deal, I probably paid three or four X what I should have because that was the market. And because of that, I'm not in fund 11, but there's one fund that's going to be okay, by the way. It's not going to lose money, but it's not going to be great.

28:37You know, the one that really invested the peak of the market because honestly, there was no other way to invest. Now, luckily I invested in good companies for the most part. and some of them, despite overpaying, they're still going to be great winners. But if every single deal, you pay three or four times what you should, then even if you have great winners, even if a fund otherwise would have been, I don't know, a 5X, it's going to be 1.5X, right? Or whatever. So yeah, I too, like everyone else, by the way, I too got carried away because this is a market. And it really, the thing is, I don't believe in my ability or anyone else's, to be honest, to time the market.

29:12In any given market, you want to do the best deals that you can. and some vintages are going to be better than others. Now, I don't think that for LPs it should matter because, again, the idea is not that they invest in one fund and that's it. The idea is that the LPs are for the long run. I'm not interested in LPs who just want it to come into one fund. So they're going to get the vintage diversification, just not specifically within one fund, but across the funds. You're saying because you do such quick successive funds, they're going to get vintage diversification by being in the fund? Yeah, yeah.

29:44So maybe one fund did not have vintage diversification and everything was invested from that fund at the peak of the market. Okay, so probably that fund's not going to be great. But my typical LP would have been in three or four funds before that and three or four funds after that. So they'll have a series of six, seven funds and one of them is going to be okay, you know, and not great. Okay, not the end of the world. The other thing is not just to invest as fast. You know, I think that, as you know, each fund was larger than the previous one. And I think at some point I overdid it. I think, and again, I reacted to the market.

30:19There were a lot of rounds. They were frequent. They were big. And I think that I have two publicized funds. One of them is going to be okay. The other one is actually going to be good despite that. But I have two funds that were over 500 million from 2021 and 2022. But my 2024 fund, I already cut it by about a half, which I think is a better size, more conducive to great returns. So we're at like$250 ,000. I have a fund that's$250 ,000 and I have a fund that's in the midst of, so I had the first close. I don't know yet what's going to be. So fund 10 is about$250 ,000 and fund 11, I don't know.

30:55But I actually, I want it to be less than$250 ,000. So when we look at that decision, I think managers are faced with the decision today. You either need to be really freaking big, a la Andreessen, General Catalyst, Lightspeed, a wall of money, or you need to be a real craftsman and boutique. Do you agree that you have to be one or the other and that is the future of venture and the messy middle will be painfully suffering? I do agree with it. 90 % agree with it. I think you have to have something special. Being middle of the road, you want to be differentiated. So I think that naturally there is a bifurcation.

31:30So either you are, you know, one of these platforms like Andreessen, like Sequoia, like maybe Lightspeed, who are bringing a lot to the table, can do things that smaller VCs cannot, including myself. Or you're going in the opposite direction of solo GPs, for example, that you have other advantages or I have other advantages. I'm not trying to be better than Andreessen in Andreessen's game. If it's going to be Andreessen's game, they're going to beat me every time. No, I offer something different. I'm faster than anyone else, for example. There are other things. There's a personal connection. There's a lot of other things that founders find extremely compelling with SoloGP.

32:11And I go for companies or founders that this is what they want. And that's differentiation. Or you have something else that differentiates you. But generally speaking, if you are a traditional five, six person partnership without anything very, very, very unique and special in the friendship that you bring to the table, then yes, I think you are in trouble because it's almost like on one hand, you're not as agile. It's not the personal connection. It still feels as a corporate to the founder. And on the other hand, you're not Sequoia. You're not going to get the very best deals. So yes, I think, yeah, you don't want to be caught in the middle.

32:49And I think, and again, unless you position or say like an amazing brand or you're just like an amazing expert in some area. Do you think a lot of funds will go out of business in the next few years, be unable to raise and slowly die? Yeah, we're seeing it already. I think it's much harder to raise in the last couple of years. I think, first of all, there's less money going to venture. But not only that, a larger percentage of it is going to the platform. So if you're not a platform, then it's much harder for you to raise. And I would say that at least 50 % of the funds today, and maybe more, either cannot raise or at least are not sure that they can raise.

33:24So they're trying to stall and, you know, not test the market. And I think many of them are not going to be able to raise. Do you think LPs have an uncomfortable awakening coming with 90 % of unicorns that they have marked as unicorns in their book not being unicorns? That is quite a difference. First of all, it depends on how the GP reports things, because there's huge latitude in how we can report things. How do you report things? You know, I try to report things in the conservative, what they're actually worth and not. To me, what I always tell LPs, whether or not you can believe numbers from a VC is less dependent on the methodology that they use, because with any methodology you can inflate or whatever.

34:05It's more a function of the personality or, you know, the character. but even more so the motivation. By that, what I mean, if you're a fund that's, let's say Sequoia, for example, they know that they can raise any time, right? So they have zero motivation to inflate numbers. They have all the motivation in the world to show things as conservatively as possible, right? Because they get no benefit from inflating numbers. However, if you are a fund that is more middle of the road and you're not sure how easy it's going to be raised or not, you're going to find any excuse to keep the prices up. to look good on paper.

34:41So I think just ask yourself as an LP, the more secure the GP that you speak with is, the less likely they are to inflate numbers. And it's easy to inflate numbers. And the accountants are not good rail guards from that perspective, because even if they challenge valuations, they always challenge the wrong things. And they always, it's complete lack of understanding. Because why would they know what companies can be? It's not in the numbers necessarily what companies are worth. So I think there's a huge latitude, which means that there's a huge challenge for LPs to tell whether the paper values are real or not.

35:19And there are only two ways. One is impractical, which is to really study every single underlying position. It's impractical. And the other one is just rely on who do they believe and who they don't. And here it's based on their experience. It's based on the personality and it's also based on the motivation of the how motivated they should ask themselves, how motivated is the GP to inflate numbers versus be conservative? You mentioned the first close in fundraising. Is the attitude mindset, what LPs want different today than what it was in prior years? Yes. First of all, in general, they've had little liquidity.

35:59By the way, that might change in 2026 in a big way because there are a host of huge unprecedented size IPOs in the works now. You know, companies like SpaceX and Stripe and Databricks and, you know, and others. So there could be a tsunami of liquidity in 2026, 2027, and that would reshuffle the cards again. And who knows how it will affect. But right now, there's been a drought of liquidity for most LPs for a long time, four or five years. Add to that the fact that what I just said, that the TVPI, you cannot accept it at face value. You have to ask yourself. So it's challenging to judge based on that.

36:40And because of that, I think there is too much focus even, but understandably, on DPI, where people hardly talked about it three years ago. and now some LPs, oh, it's just DPI, it's just DPI, we don't believe anything. So that's, again, that's also an approach. When you see something that's difficult to understand, one approach can be, okay, I just discount it, I don't know, and I treat everyone the same, I just don't believe anyone. That's an approach. I don't think it's the right approach, but it could be an approach. So yes, so from that perspective, I do see a change. Number one, they have less liquidity, and they're very focused on DPI, more than two, three years ago.

37:14But by the way, Harry, I do think it's a cycle. So I do think it will change again. But right now there is this focus here. The lack of liquidity in large part is down to the extension of private markets, the platforms that are able to have the supply side of cash to fund them for longer. That means that we either have to hold them for longer or we can sell secondaries. How do you think about proactively selling secondaries and managing the book pre-going public? I understand why others do it. I don't. Again, the reason is motivation. So first of all, in any given moment, anything that I want to sell, I won't be able to.

37:51And everything that I can sell, I don't want to sell. Okay. The things that I can sell are the best positions. And I want to keep, if it makes sense, you know, the assumption that I'm going to sell something, you cannot assume that the buyers are stupid. So they're only going to buy things that they think they can double or triple within the next two or three years. Now, you know, if it can double or triple in the next two or three years, I'd rather keep it. Right. So almost by definition, to sell anything, it's possible to sell it, but you have to give a significant discount to the buyer. Otherwise, they're not going to do it.

38:21They're not stupid either. So why do people do it? I think people do it, again, if they need it for the fundraising. Sorry for interrupting you. We sold something earlier this year. And we knew it would be double or triple in a couple of years, for sure. But, dude, there was inherent risk baked into that. There was a lot of execution risk that was dependent on that. then there'd be a lockup on the IPO. If I'm thinking about IRR for our investor, fuck it. They'd rather have a 3X back now than a 4.5X back in two to three years' time, dependent on a successful IPO and then a good whole period. But let me go with the numbers because I do still remember my second grade math.

39:02You said 3X versus 4.5X. That means that you only believed 1.5X over the next three years with a lot of risk. Yeah, so this is what you believe you should have sold. Absolutely. But in general, of course, there are some positions that I can justify. Yeah, that I can justify a sale. But in general, if I know that I need to raise and if I know that in order to raise, I need to show more DPI, then I can understand why a manager would be willing to give up upside in order to show DPI today and help them raise the money. You know, I never felt that I needed to do it. And I, first of all, I'm the biggest LP in every, in every one of my funds, I'm the biggest LP.

39:42Every single one. Can I be blunt? How much of a fund generally are you? Like 10 %? About 13, about 13, 14%. And I don't have any LP who's more than 10 % in any given fund. So I'm always, every single fund, I'm the biggest LP. And on top of it, I have 30 % carry. So really I'm 40 something percent of the economics. So of course I think as LP and I'm trying to maximize the long-term value and I don't want to show change myself as an LP. So I believe, by the way, in radical alignment with LPs. And this is why I set up, by the way, I pay myself zero. I don't see anything, which is very unusual. I don't know any VC in the world, as far as I know, that has zero income from the management fees, zero.

40:22So you don't take a management fee at all? First of all, I take low management fees, but I reinvest 100 % of it in the fund. So I don't have any expenses because I don't have an office. I don't have people. I don't have any expenses. And I don't pay myself anything. So I see zero. Before the investors see their money back, I don't see anything from LPs. Before they got 100 % of the money back. By the way, even the way the management fee reinvestment works is that the way it works technically is that I don't actually, despite being an LP, I don't actually get paid until the LPs got 100 % of the money back.

40:56That's how it's set up. So this is radical alignment. I don't see a shekel, a dollar, before they see the money back. And because of that, I'm really, really clearly incentivized to optimize for the LPs. Remember what I said at the beginning of the call, substance versus appearance? So I'm 100 % substance, 0 % appearance. What do you think are the biggest misalignments between GP and LP today in venture? Look, especially in the larger funds, the compensation that the GP gets from the management fee, especially if you account for time value of money, is typically greater than the upside. So let's say you have$10 billion and you charge 2%.

41:39The minute you close the fund, you already made$2 billion because it's 2 % over 10 years. That's 20%. You already made$2 billion that are, by the way, you're going to see them over the next 10 years, but starting today. Now, the carry, you'll start seeing maybe in seven, eight years, maybe, you know, because it takes time to return these funds. So if you double the fund, you get another, let's say it's 20%, you get another$2 billion, okay? But you're only seeing this$2 billion in eight years. So if you, you know, you take into account with, you know, you apply discount rate, you're seeing more from the management fees.

42:12So I think that for many funds, they really want to do well enough to be able to raise the next fund. And the whole thinking is, what do we need to do to raise the next fund? And if it means selling something early to show DPI, then yeah, of course, they'll do it. You know, and again, in some cases, it can lead to other things. So this is one set of maybe misalignment. The other set of misalignment is actually not between the GP as an entity and the LPs, but within the individual GPs, because the larger the partnership is the investors, not even the GPs, but also the younger partners, they're first and foremost managing their career.

42:52So, you know, if there's a conflict between what is good for the individual manager and the long-term maybe value of the fund, guess what? I'll give an example. You know, if a partner in a partnership, especially a large partnership with politics and all that, they're much more interested in their investment succeeding than anything else because that's their career. If their fund is great, but they didn't get the credit. You know, remember the partner that I mentioned that never saw a follow-on deal he didn't like? That's part of it because there's an incentive to admit failure. You know, they have all the incentive in the world to convince their partners to put more money into this company, roll the dice again.

43:32And who knows? Maybe it's going to succeed. And even if not, they bought some time personally, you know. So I think the larger the partnership is, the more there is not 100 % alignment between the individual partners. And just like in a company, the guy in sales can have different motivation than the guy in product or the guy in marketing. And, you know, and in my case, it's just me. So there's 100%, there's no difference. And I'm the biggest LP, so the LP is just there's zero conflict in my mind. One area that's very challenging as we look at the market today is also by pricing. I look at Series A today, dude, and I think it's the worst place to be investing.

44:09And so I'd love your thoughts on this. We have 200 XAROs, 150 XAROs. There's very little company progression from the seed round, but there's a very steep price increase. It's a very competitive stage. How do you advise me, others to navigate this seemingly very bad insertion point today? Okay. So first of all, I agree, but with a few comments. First of all, scratch the word today. It's always been the case. even 30 years ago, that you have a seed round, basically founders in the idea, it's priced low. And then a year and a half later, basically they have now 20 people, they have an office, maybe they have a few small customers, they really haven't proven anything.

44:53But the perception is, oh, now it's a company and we made so much progress. Now we have a product, now we have this. You really didn't prove anything. And all of a sudden they jump in valuation. There's nothing new under the sun. This has been the case always, okay? So this is something to be worried about always as an investor. That's the first comment. Observe it. The second comment is, I agree with you. Just watch it not to be confused by the name of the round. Because calling it A, that's just a name. You can call it anything. You can call it seed one. You can call it A. It's just a name. And I think people, when they talk, it's kind of a shortcut.

45:25You say A, and it's, oh, I know what you mean. Actually, no. Because we can both call something round A, and it would be very, very, very different thing. So I wouldn't be caught up. I don't care if it's called A or B or C or whatever. Generally speaking, when I look at the second round, after the first round, I want to make sure that the progress that I'm seeing is really substantial in terms of risk reduction as opposed to the looks of it, the optics of it. So if the progress is, oh yeah, now we have a product. And as I said before, and we have a few logos, but really they didn't really make a commitment.

46:00Really, they haven't renewed yet. The tough question is for an investor, whether it's me or you, are the indications that I'm seeing, is it a real signal of product market fit or is it just noise? Because if it's not real signals of product market fit yet, then nothing has really changed since the seed. If anything, maybe the opposite. The very fact that after a year or two, they don't have signs of product market fit, maybe it means that it should be worth less than what it was worth at the seed. because at the CID, you had the option value of maybe within a year, you will have it. So, so I think that's the thing.

46:33It's not about whether you call it A or not. It's about really exercising judgment if this really represents product market fit or not. What do you think of the rise of very proactive preemptive rounds where you have a company raise and then a month later, Iconic or any of the big platforms come in and shove another 50 million bucks in and very little has changed again it's still on three million of ARR do preemptive rounds work more often or less often in your experience I think my advice to founders and it's an advice that's harder how to follow actually because I cannot fault a founder for taking 50 million to higher valuation if they're being offered that but I often tell them and they you know it's hard but some of them the more mature ones are able I believe my advice is take the money but continue it to behave as if you didn't.

47:23Don't spend money just because you have it. You know, companies can be overfunded and it can lead to loss of focus. So if the founder is mature enough and strong enough to take the money, put it in the bank, but spend it based on the signals that they get from the market as opposed to the pressure that they're getting in the boardroom, I think they should take the money because it would be stupid not to. But Jason Lampkin is a dear friend of mine, very famous SaaS investor on Twitter a lot. And he says, founders today, they don't want to hear your thoughts. They don't want to hear your opinions.

47:58They at best will say thank you and ignore you. And at worst will say, God, what a dick and say bad things about you for giving the advice. Do you agree with that perspective that founder sentiment has changed towards investor advice? I'm not feeling it personally. I feel that founders that I back, the only reason they speak to me and ask my advice is because they want to hear my advice because, and I'll tell you why, because I never forced my advice. So they, for them, I'm a safe environment. You know, it's like going to a psych, you know, to a psychotherapist because they don't, and the other thing is they don't need to convince me because I'm going to support them even if I think they're wrong.

48:36So when you feel that as a founder, that you need to convince someone that then you're not so much in a receptive mode. You're, you know, trying to think, okay, what, how do I overcome this objection and that objection? When, when I have a conversation with the founder about something. And the founders know before we even start the conversations that no matter what I think I'm going to support what they want to do, it disarms them. And then they're much more in receptive mode. Because otherwise, why even talk to me unless they really want to hear what I say? Now, so I'm not personally feeling it.

49:05I think it also depends on the way you deliver the advice. And there's a famous book about raising children. And I think the title is How to Talk to Children So That They Listen and How to Listen So That They Talk. And I think it's very, it's very, I love the name of the title because if when you listen, you keep telling, whether it's your children or fathers, you're being judgmental, you're being, you're accusing, you're not patient, you know, you think you know better, then of course I'm going to be less receptive to listening to your advice. So I think it also, by the way, I don't know Lampkin at all.

49:46So it's not, you know, I don't want to sound like I'm bad-mouthing him and I've only heard good things. So it's not personal, right? But in general, I do think that you want to be, as an investor, you want to be mindful of how you give the advice. And if you come from a point of know-it-all, then I think that most founders would not react well to it. I wouldn't react well to an LP who would start telling me, even if they're right, by the way. I remember, by the way, an LP of mine who two years ago was very critical of the size of my fund and really pushed me to do a much smaller fund. And I didn't like the way they delivered it.

50:26And I wasn't willing to listen to them, even though in hindsight I think they were right. But at the time, I wasn't willing to listen to it. In fact, I told them, listen, there's a very easy way you can help in making it a smaller fund by just not being the next fund. And to my surprise, I was sure that I lost that LP. To my surprise, they stayed with me. Today we have a great relationship. But, you know, even I was not listening to advice, which in hindsight was the correct advice. So I think it's also the delivery is also important. How have your thoughts on ownership changed over time? The reason I ask this is because, like, we could have invested in 11 labs at the seed round.

51:01We would have got 1%. We could invest in granola at the seed round. We would have got 1%. But we do what we tell LPs on, which is we lead rounds and we take double digits ownership and we are your concentrated investor. How have your thoughts around ownership changed and where do they sit today? So first of all, they haven't changed. And that's exactly why I don't tell LPs anything in terms of what I'm going to do, because I feel that if I tell LPs something, I would feel too committed to that specific strategy, which I may have thought it was the right strategy. But then there's a situation that requires being flexible.

51:34So I tell LPs I only have one rule. And that rule is that I have no rules. I think it all depends on the circumstance. And in some circumstances, I would, in some cases, I would do things that maybe an hour before the meeting, I didn't think I would do. I'll give an example. And by the way, which is still an ongoing company, I don't know how it's going to end. But you know, there's this AI company called Descartes. Have you heard of it? Yeah. So I met them a little bit over two years ago. I met them over Zoom. And when we met, they said they're going to start. It was just the two founders. They didn't really have an idea, but they were exceptional.

52:08And they told me, yeah, we already have$3 million committed. We're going to close on it in the next 24 hours from a bunch of really good angels. I asked them, if I wanted to invest, what can you do? And they said, what we can do is we can cut them back 50 % and give you$1.5 million of the$3 million. By the way, it was going to be an uncapped safe. I normally don't do safes at all. But in this case, I said, you know what, I'll do it. But I needed to be capped and we capped it. Luckily, because otherwise, at least for the investors, it was lucky because the next one was at a very high valuation already.

52:45So I ended up with, you know, 5%, which is way less my normal ownership of one and a half million. I assumed that I'd be able to increase it later. It never happened. The reason it never happened is because they became profitable very, very, very quickly. So they didn't need more money. they only took sequoia money because they wanted sequoia and they later took benchmark money again because they wanted benchmark and so i was able to maintain my ownership but i was never able to increase it so i deviated from my rules again i don't have rules you know i don't have minimum ownership i don't have rules at that point it made sense to want to do it and i'm glad i did and it helps not telling lps i'm gonna do this i'm gonna do that because then you don't have to later explain why you didn't do what you told them.

53:28Does having Sequoia on your cap table move the needle for a company, do you find? I think it depends on the situation, the partner, but they're a great firm and they have a great, you know, I've partnered with Alfred in one deal and in the case of Descartes, it's Sean Maguire and I think they're great. And I think there is a chance that it will make a difference. Can I ask a weird one? Hunter and Satya at Homebrew have been incredibly successful as of you and decided not to raise more money from LPs, manage their own money, and they can be way more collaborative because they don't manage other people's money and they just invest their own.

54:03You could do the same. I have done the same before. Between Apex and doing what I do now, I've done what they are doing now for eight years with my own money. Yeah, I have done the same. Why do you not go back to it? You could be more collaborative. You don't have to have LP management you have to fundraise why do what you do now why would i want to be more collaborative because you can get into more deals i don't want to get you know i want to be the main player i don't want to get into more deals necessarily i want to the ones that i do i want to make it i want them to matter and i want you know to be as meaningful as possible to be the player the main back or one of at least uh so how many companies do you want in a fund in the early funds it was less but now it's more like 15 but there is a lot of crossover between the funds so So I'm now in fund 11 and I only have 40 companies.

54:52So if it was exclusive, it would be four companies per fund. But it's not because, you know, you see the same names in different funds. Can we do a quick fire round? I'm going to give you a series of short statements. That's scary. Okay. No, it's not scary at all. What do people not know or see about having money that they should know and see? I find that there is an increasing level of hating the successful, hating the rich. I see it on Twitter. I think in Europe it's even worse, but it's come to America, unfortunately. I think many people, unfortunately, generally believe that rich people are evil or that you cannot become rich without taking advantage of other people, et cetera.

55:33And the reality is that rich people are as evil and as good as anyone else. And most rich people that I know actually are looking for ways how they can use, leverage their success to make the world a better place. but you have politicians who are trying to come up with all sorts of suggestions how to basically hurt successful people for being successful, of course they're not going to get cooperation because they feel that it will make them more popular among people who assume that if someone is rich, it's because they did something bad. So I think this is, I don't know, this is more about politics than about business, But I think one of the strengths of America, they always, always believed in merit and success.

56:21And let's say that I'm not a fan of the movement or the woke movement that is dragging or trying to drag America in the other direction. I didn't mean to be political, actually. Are you concerned by the labor displacement theories of AI? I'm excited because I'm going to make a lot of money, but I'm also nervous because I don't know what's going to happen. Are you? I feel exactly the same as you. Look, I think it's the most powerful transition or force maybe in history. And just like any powerful force, there are very good reasons to be excited and there are very good reasons to be worried. And I'm pretty sure that we're going to be proven right on both sides.

56:59Our words are going to be proven right and our excitement is going to be proven right also. Do you think a lot of people respectfully, and I mean this so respectfully, with your wisdom and years of experience, say, oh, Harry, it always looks like this. It always takes longer than you think. It always takes longer. And part of me goes, I get that and I respect your experience and wisdom. And part of me goes, this feels a bit different. Yeah. Which side are you on? Yours. Good. Yours, but I very much hope to be proven wrong on the concern side. Which is the most memorable first founder meeting that you've had?

57:36Okay, I'll give you one. A relatively recent investment from a year and a half ago called Sensi, which I think is on fire, is going to do great. I love the founder. She's a force of nature. And so I'm cheating a little bit because it's not first meeting, it's second meeting. So I met her a year earlier and it was the same company. It already had revenues even then. I found it interesting, but not interesting enough. I had a lot of concerns. And a year later, I almost didn't take the meeting, but she told me she's in town and can we have coffee? And I meet there. And within five minutes, I realized that, number one, all my concerns from a year ago were addressed in flank collars.

58:16And number two, she's a different person. Like she felt so confident because I met her a year earlier and she didn't convey this confidence. I knew it was real. It wasn't like bullshit confidence. It was real because I also saw her less confident. So within five minutes, the whole conversation changed. And, you know, within 24 hours, by the way, Sholdi had a couple of term sheets from big brand names and I took the deal. What's your biggest miss and how do you reflect on that? I mentioned deal for me. Yeah, you know, I don't have too many, which means that I'm not seeing a lot of the great. To be honest, it's not a good thing.

58:53I'm not proud of it because I didn't see that. By the way, I love Alex. This time, Alex from Deal. Now, I do have misses from the Apex days where I saw something that I wanted to do, but I knew that there was no way I could get it approved, including Facebook, by the way. In the very early days, I saw it. I could have done it, brought it to the partnership. It was dead on arrival. The one that I know I could have done is I tried to convince the partnership to buy. I made the investment in Audible. It was my first big home run. And then it went public, and it was a great—we sold not all the shares, but enough to make it the home run.

59:27and then the stock price dipped and it was obvious to me that it's temporary and I wanted to basically take it private and I couldn't, you know, and I could have because the founder was totally on board because he didn't like being public and I couldn't get it approved. But this is less of a mess of mine because I tried and then, because the founder already decided that they don't want to be public anymore, we ended up selling it to Amazon and now it's a huge, humongous company and it would have been an amazing deal if we took it private, it, but that's less of a, in terms of, I'm sure, by the way, I'm sure I did.

59:59I do have things that I missed, but not one of the really great names, not an open AI or Anthropic or anyone's. Wiz is an interesting story because when I heard that, I didn't know Asaf, but when I heard that he was leaving Microsoft, I didn't even know he was starting a company. I asked someone to make an introduction. I guess he checked with them and he connected us, but he used the Microsoft email address, which Asaf was not checking. So I tried two or three times, didn't get an answer, and I moved on. Now, two years later, when I met him for the first time, I asked him, why didn't you respond to me?

1:00:37And then we worked it out back. And it turned out that he was, on one hand, he still had this email, otherwise it would have bounced. And on the other hand, he wasn't checking it. But to be honest with myself, I don't think I would have got the deal anyway, because I think he was, you know, he had an amazing cyber investor from his previous company who also led, you know, I think you know him, Gilly, and, you know, it was his deal. I wouldn't, I wouldn't, you know, and he's not a much of a, just like me, he's not much of a collaborator either. So I don't think he would have done me any, you know, I don't think I would have got into the deal anyways, just because, and by the way, this is one thing that is consistent fallacy within VCs, that they think that just because they saw a deal, they necessarily would have been able to do it.

1:01:16No, you know, with all due to anti-portfolio, it doesn't make sense that the same deal appears in 20 different anti-portfolio because it's not as if the 20 could have done it, you know? No, mine I could have done, actually. I've got three$10 billion companies now where I legitimately could have. By the way, it's easier when you write a small check because and you have the value that you have, then why would people not let you in, right? It's harder when you have to be the winner and exclude everyone else. so yes I agree you could have done by the way Riverside 2 Riverside 2 which is the uh it's not 10 billion yet but it will be I believe and uh dude you sent it to me do you remember this yeah that I was like dude you're an idiot zoom is gonna continue like I really what are we on now oh Riverside exactly that's just keep sending things or next time I won't ask okay You mentioned Mickey earlier And we mentioned Mickey earlier Which investor do you most respect and admire And why then?

1:02:18Mickey is definitely very, you know I don't want to say the only one But he's one that I super respect Not just as an investor But also as a human What do you take from your relationship with him? Like for me, he taught me You've never won or lost You're only ever ahead or behind I always remember that Okay, I have to think about it no look i i've been in this business longer than he has and actually when he started he came you know also consult with me and so it's not it's less of some mentorship but what i so respect about him is that he just he's so authentic and he speaks his mind is and he has his you know his own way of doing things i have mine different but actually i think it's harder the way he does it because you know it's one thing to do things your your own way when you're one person it's another to be a leader of a group, which he is.

1:03:08So it's a much better leader than I ever will be or aspire even to be. And no, I think it's just a great person. Tell me, final one, what are you most optimistic about? I always like to end on a theme of positivity. We mentioned I being concerned about labor displacement. What are you most excited for, happy about? Listen, AI is the biggest change ever in the history of humanity, I believe. So it's only the history of technology. and it changes everything. And whenever there's change, there's opportunity to make things better and to build huge amount of value. And we're, you know, and we happen to be placed at the very, very, very, you know, it's the best time in history to be an investor.

1:03:47It's the best, I'm in the Bay Area, you know, with the best ability to make these investments and be part of these things. So I'm super bullish, but I've never, never had so many companies that are crushing it and building market leaders, you know, in my portfolio that I'm super excited about. Almost every vertical, right? There's an opportunity to reinvent with AI. So I'm super bullish. Now, the fact that I'm bullish personally about my investments or about the potential investments or even about the VC industry in general doesn't mean that I'm not worried about the political side of things with the political unrest because of people get disenfranchised and things like that.

1:04:25I think it's very, very, very risky to humanity. So it's, and as I said, it goes together. If something is powerful, then it's going to be very exciting and scary at the same time. And if something is weak and not powerful, it's not going to be scary and it's not going to be exciting. So it goes hand in hand. Or you've been a friend to me for many years. I so appreciate. I said at the beginning, it's so funny. And I don't know why. Ten years ago, I was 19 and I really had nothing. And you were so kind to me then. You've been so kind to me since. I really appreciate the friendship. So thank you for being so amazing, dude.

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